Transcript ICC Seminar

INCOTERMS 2000 - In context
ICC Iceland
Legal Director Søren Theilgaard
24 March 2004
INCOTERMS 2000 - Søren Theilgaard
1
INCOTERMS 2000








24 March 2004
Welcome and Introduction
Presentation of INCOTERMS
INCOTERMS and Contract of Carriage
INCOTERMS, Delivery and Payment
INCOTERMS and Insurance
Problem areas in INCOTERMS 2000
Questions and Answers
Closing
INCOTERMS 2000 - Søren Theilgaard
5
25
20
20
15
60
10
2
PRESENTATION OF INCOTERMS
 History - What is INCOTERMS
Supplement to Sale-Purchase Agreement
Record of international customs and usage
1. version 1936. Updates 1953 - 1980 - 1990
What is new in INCOTERMS 2000
 No obligation - Where applicable
 13 Clauses and 4 categories
 10 obligations
 Variants of INCOTERMS
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INCOTERMS 2000
What is new ?

EXPORT / IMPORT CLEARANCE IN ONES OWN
COUNTRY
- NOW ALSO FAS OG DEQ

LOADING ON AND UNLOADING FROM VEHICLE
- FCA:
At Seller’s premises Seller must load
At terminal carrier must unload
- DAF:
24 March 2004
- DDU:
Goods arriving at destination without
- DDP:
being unloaded from vehicle
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INCOTERMS 2000
What is new ?
 FCA - CLAUSE HAS BEEN SIMPLIFIED AGAIN
- No distinction between different means of transportation,
full container load or consolidated goods

GREATER CONSISTENCY IN TERMINOLOGY

More places indicate: NO OBLIGATION
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INCOTERMS 2000
What is new ?
 EXPORT / IMPORT CLEARANCE:
- Only WHERE REQUIRED
 CFR/CIF A8 - CHARTER PARTIES
- Unlike Incoterms 1990 no requirement that the Charter
Party must be presented when transport document refers to
the Charter Party
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INCOTERMS 2000
4 CATEGORIES
Group E Departure
EXW
Group F Main carriage unpaid
FCA - FAS - FOB
Group C Main carriage paid
CFR - CIF - CPT - CIP
Group D Arrival
DAF - DES - DEQ - DDU - DDP
< 1953
24 March 2004
1967
1980
INCOTERMS 2000 - Søren Theilgaard
1990
7
INCOTERMS 2000
MODE OF TRANSPORT AND THE APPROPRIATE
INCOTERM 2000
Any mode of transport
Group E
EXW
Group F
FCA
Group C
CPT - CIP
Group D
DAF - DDU - DDP
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INCOTERMS 2000
MODE OF TRANSPORT AND THE APPROPRIATE
INCOTERM 2000
Maritime transport only
Group F
FAS - FOB
Group C
CFR - CIF
Group D
DES - DEQ
- or in combination with a different mode of
transport
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10 MIRRORED OBLIGATIONS
1)
PROVIDE GOODS - PAYMENT OF PRICE
2)
LICENSES, AUTHORIZATIONS AND FORMALITIES
3)
CONTRACT OF CARRIAGE AND INSURANCE
4)
DELIVERY - TAKING DELIVERY
5)
TRANSFER OF RISKS
6)
DIVISION OF COSTS
7)
NOTICE TO BUYER AND SELLER
8)
PROOF OF DELIVERY, TRANSPORT DOCUMENT OR
EQUIVALENT ELECTRONIC MESSAGE - EDI
9)
INSPECTION OF GOODS, PACKAGING AND MARKING
10)
OTHER OBLIGATIONS
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INCOTERMS 2000








24 March 2004
Welcome and Introduction
Presentation of INCOTERMS
INCOTERMS and Contract of Carriage
INCOTERMS, Delivery and Payment
INCOTERMS and Insurance
Problem areas in INCOTERMS 2000
Questions and Answers
Closing
INCOTERMS 2000 - Søren Theilgaard
11
CONTRACT OF CARRIAGE
 Rules regulating international transportation:
 Road - CMR Geneva Convention 1956
 Rail
- COTIF Berne Convention + CIM
 Air
- Warszaw and Montreal Convention)
 Marine - Merchant Shipping Act
Carriage of Goods by Sea (Haag-Visby
and Hamburg Rules)
 Freight Forwarder - NSAB 2000
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CARRIER’S LIABILITY
 Liability
 Road:
Control
 Rail:
Act of God
 Air Way:
Act of God
 delay
 Marine:
- Burden of proof
Negligence - reverse burden of proof
 Freight Forwarder: Control
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CARRIER’S LIABILITY
 Limit to liability
 Road:
8,33 SDR pr. kilo
 Rail:
17 SDR pr. kilo
 Air Way:
17 SDR pr. kilo
 Marine:
667 SDR pr. kollo
or 2 SDR pr. kilo
 Freight Forwarder: 8,33 SDR pr. kilo
1 SDR = app. 1.20 EURO
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CARRIER’S LIABILITY
 Limit to loss in case of delay
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
Road:
freight

Rail:
3 x freight

Air Way:
17 SDR pr. kilo

Marine:
2½ x freight

Freight Forwarder: freight
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INCOTERMS
and CONTRACT OF CARRIAGE
CARRIER

Receives Goods from Seller

Issues Transport Document

Responsible for the Goods during
transportation

Hands over Goods to Consignee /
Purchaser
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CONTRACT OF CARRIAGE
 3 Functions
 Receipt for the Goods
 Contract for carriage of the goods
 Authority to hand over the goods
 Freight receipt - Sea Waybill / Non negotiable
 Bill of Lading
 Charterparty
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CONTRACT OF CARRIAGE
 In accordance with Sales Contract
 Division of costs
 Risk - Interest
 Liner Terms or Tramp Terms
 Cargo Insurance
 Basis for payment through Documentary Credit
 Contracting or performing carrier
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COSTS
 In accordance with Sales Contract
 INCOTERMS Item A.6 and B.6.
 Passing upon delivery
 exemption: C-Clauses
 In accordance with Contract of Carriage
 In particular loading costs
 Transit costs
 Terminal Handling Costs
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INCOTERMS 2000








24 March 2004
Welcome and Introduction
Presentation of INCOTERMS
INCOTERMS and Contract of Carriage
INCOTERMS, Delivery and Payment
INCOTERMS and Insurance
Problem areas in INCOTERMS 2000
Questions and Answers
Closing
INCOTERMS 2000 - Søren Theilgaard
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DELIVERY
 What is delivery
 Consequences of delivery
 What happens is delivery does not occur
passing of risk - A5 / B5
costs - A6 / B6
 Where does delivery occur - INCOTERMS A4
 Choice of INCOTERM Clause has an impact on
delivery, passing of risk and costs
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DELIVERY
|
|
|
|
Marine transport
Carrier
Border
Seller’s
place
Departure
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|
| |
Buyer’s
place
Arrival
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PAYMENT

WHEN MUST PAYMENT BE MADE

WHERE MUST PAYMENT BE MADE

PAYMENT IF GOODS ARE NOT RECEIVED

INSURANCE MAY REPLACE PAYMENT



24 March 2004
Cargo Insurance
Credit Insurance
Documentary Credit
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PAYMENT
When must payment be made ?
 CISG Art. 58
(1) If the buyer is not bound to pay the price at any other specific time
he must pay it when the seller places either the goods or documents
controlling their disposition at the buyer's disposal in accordance with
the contract and this Convention. The seller may make such payment a
condition for handing over the goods or documents.
- Cf. however CISG Art. 57 (1) - Payment when
documents are handed over to buyer.
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PAYMENT
When must payment be made ?
 CISG Art. 58
(2) If the contract involves carriage of the goods, the seller may
dispatch the goods on terms whereby the goods, or documents
controlling their disposition, will not be handed over to the buyer
except against payment of the price.
(3) The buyer is not bound to pay the price until he has had an
opportunity to examine the goods, unless the procedures for delivery
or payment agreed upon by the parties are inconsistent with his
having such an opportunity.
- E.g. Cash against Documents or FOB / CIF INCOTERMS 2000
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PAYMENT
Where must payment be made ?
 CISG Art. 57
(1) If the buyer is not bound to pay the price at any other particular
place, he must pay it to the seller:
(a) at the seller's place of business; or
(b) if the payment is to be made against the handing over of the goods
or of documents, at the place where the handing over takes place.
 Payment against documents
- Where and when documents are presented .
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CISG LANDE
 CISG lande
 Ikke CISG lande
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PAYMENT AGAINST DOCUMENTS

Which documents

Certainty that agreed documents are prepared

Payment before Delivery / Passing of Risk

Seller’s comfort

Buyer’s comfort

No guarantee that payment is made / only
retention right
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LETTER OF CREDIT

Agreement on payment guarantee and terms
of payment

Agreement between buyer and issuing bank

Honouring bank - Confirmed L/C

Satisfying Documentary Credit conditions

L/C Rules between banks / ICC 500
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INCOTERMS 2000








24 March 2004
Welcome and Introduction
Presentation of INCOTERMS
INCOTERMS and Contract of Carriage
INCOTERMS, Delivery and Payment
INCOTERMS and Insurance
Problem areas in INCOTERMS 2000
Questions and Answers
Closing
INCOTERMS 2000 - Søren Theilgaard
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INCOTERMS and INSURANCE
 Insurance for own interest / Who is at risk ?
 Seller insuring buyer’s risk
 CIF / CIP:
from delivery to destination
contract price + 10%
minimum conditions
direct claim against insurance company
 Additional insurance required
theft, jettison, water damage, strikes, war
higher insurance sum, redestination,
subsequent transportation, sale in transit
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INCOTERMS and INSURANCE
 Institute Cargo Clauses C
 Covers named events
 Institute Cargo Clauses A
 All risk insurance except
- strikes, war, inherent vice, deficiency in packaging, ordinary
leakage, delay
 Certain events are not insurable
 Who carries the risk for the goods ?
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INCOTERMS and INSURANCE
 Insurance Interest
 Who carries the risk for the goods ?
 Insurance of subsequent interest
 Sale of goods in transit
 Claim against insurer
 Who carries insurance interest
 Assignment of insurance interest
 Recourse against carrier
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INCOTERMS 2000








24 March 2004
Welcome and Introduction
Presentation of INCOTERMS
INCOTERMS and Contract of Carriage
INCOTERMS, Delivery and Payment
INCOTERMS and Insurance
Problem areas in INCOTERMS 2000
Questions and Answers
Closing
INCOTERMS 2000 - Søren Theilgaard
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INCOTERMS 2000
Problem Areas
Frequently Asked Questions
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INCOTERMS 2000
FAQ

Delivery upon loading on / unloading from carrier’s vehicle.
- must loading/unloading be completed for delivery to happen ?
- who pays the cost and carries risk of loading / unloading ?
EXW - Not loaded on collecting vehicle arrival
FCA -
Loaded on vehicle at Seller’s place, but not unloaded at carrier’s
place
DAF -
not unloaded at border
DDU/
DDP -

not unloaded at place of destination
NB difference between FCA and FAS:
FAS - Delivery only when goods are placed on quay alongside vessel
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INCOTERMS 2000
FAQ

When delivery is effected without loading (EXW) or unloading
(FCA), what is the legal effect of Seller assists Buyer to do so ?
- Reimbursement of costs ?
- Risk ?
- Is delivery postponed until loading / unloading is completed ?
Similarly in DAF, DDU and DDP when carrier assists in unloading.

What is the meaning of EXW loaded / FCA unloaded ?
- Does not intend to change the passing of risk
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INCOTERMS 2000
FAQ

FCA - Delivery when carrier arrives at Seller’s place with a
container instead of a truck. Is Seller obliged to stowe goods
in container ?
24 March 2004

Yes, if carrier so requests and it is not unusual (cf. Seller must
load on carrier’s collecting vehicle)

Does Seller not wish to assume that obligation he should
have contracted EXW.
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INCOTERMS 2000
FAQ

Terminal Handling Charges - FCA

Export clearance - Seller’s cost

Cost of carriage, Warehouse storage after buyer’s receipt of goods
- Buyer’s cost

Wharfage and Airport charges - Not export taxes that Seller must
pay. Depends on whether charge is triggered before or after
delivery.

Air transport security fee - similar
- Possible clause
24 March 2004

THC for Seller’s expense

Customs and practice between parties may shift THC
INCOTERMS 2000 - Søren Theilgaard
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INCOTERMS 2000
FAQ
 Terminal Handling Charges - FOB

Seller’s cost until delivery when goods pass ship’s rail

Similarly according to FAS until ”alongside ship” (on quay or in
barge)

If Seller wishes to avoid costs in port of shipment he must choose
FCA

Costs relating to marine transportation, including quay charges and
transshipment in subsequent port must always be paid by Buyer.
 Terminal Handling Charges for container load

24 March 2004
Seller has effectively done what he is supposed to do when
container has been loaded, whereas delivery and division of costs
and risk does not occur until goods pass ship’s rail.
- Not appropriate - Choose FCA instead.
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INCOTERMS 2000
FAQ

FOB - What is ship’s rail ?


FOB - Passing of Risk in case of transshipment


FOB Helsingborg. Truck to Hamburg.
- Wrong use of FOB Incoterms.
FOB Airport destination Japan ?

24 March 2004
FOB Helsingborg, transshipment to Ocean Vessel in Hamburg.
Delivery and Passing of Risk at Helsingborg.
FOB - Pre Transportation ?


Shall be understood literally - subject to interpretation
Air forwarder receives goods at Danish airport, carries goods
to Frankfurt. Accident on the road. Who carries risk ?
- Not an approved Incoterms.
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INCOTERMS 2000
FAQ

24 March 2004
FOB - Does Seller have the obligation to ensure that
Goods are Stowed / Trimmed ?

Only where agreed to - (Handling after delivery)

FOB Rotterdam Incoterms 2000 Stowed and Trimmed is
merely a cost clause and does not change delivery or
passing of risk.
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INCOTERMS 2000
FAQ

Place of Delivery ?
Seller’s place or when Seller is handing over the goods:


At Seller’s:
At Carrier’s:
EXW
FCA, FAS, FOB, CFR, CIF, CPT, CIP
Buyer’s place or Buyer’s carrier:




DES, DEQ
DAF
DDU, DDP
Specifying point at the named place of delivery ?

24 March 2004
Port of
Destination:
At Border:
At Buyer’s:
Seller’s interest. We pays costs and carries risk until that
point. - Right to elect point within named place.
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INCOTERMS 2000
FAQ
 Place of delivery in EXW-Clause
EXW agreed, but Seller contracts on behalf of Buyer for transportation
and insurance and invoices EXW-price + freight and insurance. Invoice
reads: CIF Port of destination. Freight and insurance prepaid.
 Are the two Clauses identical ?
- Cost and freight ?
- Risk ?
EXW Amsterdam, to be shipped to Buyer’s address Sacramento CA
arrival 20 April 2004.
 Where does delivery take place ?
- Cost / Risk ?
- Delay ?
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INCOTERMS 2000
FAQ
 Place of delivery in C-Clauses
CIP Johannesburg by air from Frankfurt. Goods are lost after storage
with Air Carrier in Johannesburg before handed over to buyer.



Where must the goods be delivered ?
- Johannesburg Airport ?
- At Buyer’s in Johannesburg area ? (Choice of destination)
Who carries risk for the loss in Johannesburg ?
Where does delivery take place ?
CIP Durban (SA) or DDU Durban (SA).
 Costs until place of destination ?
- Buyer pays transit costs and possible unloading costs
according to CIP ?
 Place of delivery and passing of risk ?
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INCOTERMS 2000
FAQ
 Place of delivery in D-Clauses
DDU Buyer’s place by air from New York to Paris. Buyer has 3
different places of business in France, which is reported to Seller only
after contract is executed.



Where must goods be handed over ?
- Paris Airport ?
- With Buyer in France, 1 point or 3 different points ?
- Costs by delivering 3 places instead of 1 ?
Who carries risk of goods being lost in Paris ?
Where does delivery take place ?
DDP Hong Kong by Air.
 Delivery at air carrier’s warehouse or at buyer’s ? (Choice of
place of delivery)
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INCOTERMS 2000
FAQ

Eksport Clearance


Import Clearance


24 March 2004
Seller, except in EXW
Buyer, except in DDP
Transit Clearance

Seller until delivery, thereafter Buyer.

Costs in transit, including permissions in C-Clauses must also
be paid by Buyer, cf. Item B6, 2.part.
- unless transit costs are included in the cost of carriage that
Seller shall pay.
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INCOTERMS 2000
FAQ

Passing of Property in Scandinavian Law

Protection against Seller’s creditors when contract has been
made and the goods have been duly appropriated to buyer.
- Swedish Law: - goods have arrived in Buyer’s possession

Protection against Buyer’s creditor when goods have arrived
in Buyer’s possession

Not important whether or not goods have been delivered or
who carries the risk.

Not settled in INCOTERMS

Other jurisdictions may view this issue differently
24 March 2004

Matter of contract.

Subject to bankruptcy rules.
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INCOTERMS 2000
FAQ
 CFR - Loading- and unloading costs

Seller pays loading costs.

Unloading costs ? - see B6, 3.part

24 March 2004
costs of loading, including lighterage and wharfage
charges, unless such costs and charges were for the
Seller’s account under the contract of carriage;

”Liner Terms” imply that the vessel takes care of both loading
and unloading and is reimbursed therefore as part of the cost
of carriage.

”Tramp Terms” or specific agreement of ”free in/free out”
implies that the carrier does not take care of loading and/or
unloading as part of the cost of carriage, e.g.
- Seller pays for loading
- Buyer pays for unloading
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INCOTERMS 2000
FAQ
 Unloading costs in D-Clauses

DAF, DDU and DDP
Buyer pays unloading costs at
destination

DES
Buyer pays unloading costs

DEQ
Seller pays unloading costs
(Seller pays transit costs until this place)
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INCOTERMS 2000
FAQ
 Wharfage
The charges paid to the port by the vessel for berthing and laytime at
quay.
 Port of departure
- FAS and FOB
Buyer
- CFR, CIF, DES and DEQ Seller
- FCA transport by sea
Buyer
- Other C- and D-Clauses
by sea
Seller until named place

Port of destination
- FAS and FOB
- CFR, CIF
- DES og DEQ
- FCA transport by sea
- Other C- and D-Clauses
by sea
24 March 2004
Buyer
Seller, if wharfage is part of the cost
of carriage, otherwise Buyer
Seller
Buyer
Seller until named place
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INCOTERMS 2000
FAQ
 CIF - What is the meaning of CIF-Landed ?

Not an authentic Incoterms Clause.

May imply that Seller must contract vessel on Liner Terms.

May imply that the parties intended to contract according to the
DEQ Clause.
 CIF - Duties and taxes (except export)

Buyer’s costs since they are not part of the cost of carriage.
 CIP - Named place Dallas, delivery Copenhagen

24 March 2004
Sea transport to Houston, unloading and transshipment to haulage
by vehicle to Dallas.
- Irrespective how contract is made with Carrier Seller must pay
unloading costs since this part of the costs accrue before named
place (Dallas).
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INCOTERMS 2000
FAQ
 CFR - Delivery and contract of carriage
-CFR Rotterdam, shipment from New York. Seller instructs carrier to
unload at Le Havre to haul goods by land to Rotterdam.

Is carrier entitled to change place of discharge ?

What happens if goods do not arrive on time in Rotterdam.

Additional costs by transshipment at Le Havre and land transport.

Risk of damage during land transportation.
 CFR - Risk attached to the goods ?

24 March 2004
Buyer claims that goods are not according to contract by arrival but
transport documents have no note that this should be the case upon
delivery.
- Clam against Seller or Carrier ?
- Cashing documents (Documentary Credit)
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INCOTERMS 2000
FAQ
 CIF - Damage during transportation
 Covered by insurance. Seller delivers again for own account and
reports damage to insurance company.
 Carrier responsible for the damage.
- Insurance claim
- Insurance company recourse
- Carrier responsibility
 Relationship between Seller and Buyer
- Insurance control
 CIF - Defect before passing of risk - Buyer rescinds contract
 Purchase price already paid ? (Documentary Credit)
 Who ”owns” the goods ?
 Who must tend to the goods ? Return / Auction Sale
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INCOTERMS 2000
FAQ

DDU - Costs
Seller pays
” all costs relating to the goods until such time as they have been delivered in
accordance with A4; and
costs of customs formalities necessary for export as well as all duties, taxes and
other charges payable upon export and for their transit through any country prior
to delivery in accordance with A4.”



Health certificate in port of destination ? Seller pays until delivery.
Wharfage ? Seller
Returning Seller’s packing material (pallets, container) - Buyer must pay
his own costs to empty pallets / container
Buyer pays
”costs of customs formalities as well as all duties, taxes and other charges
payable upon import of the goods.”
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SLUT
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